Can an Expanding Clientele Push PayPal Shares Higher in 2025?

Core Insights - PayPal's portfolio strength and two-sided platform are enhancing relationships with merchants and consumers, contributing to a 2% year-over-year increase in total active accounts to 434 million in 2024 [1] - The company has seen a 10% year-over-year increase in total payment volume (TPV) to $1.68 trillion, driven by an expanding clientele and strong adoption of new services [3] - PayPal shares have outperformed the Zacks Computer and Technology sector, returning 35% over the trailing 12 months compared to the sector's 25.6% [4] Active Accounts and Transactions - Monthly active accounts rose 2% year over year to 223 million, with payment transactions increasing 5% to 26.33 million [2] - Transactions per active account (TPA) increased by 3% year over year to 60.6 million, while excluding PSP, TPA grew by 4% to 34.9 million [2] New Services and Partnerships - The launch of Fastlane has attracted over 2,000 merchants, enhancing the guest checkout experience and driving increased conversion rates [7] - Partnerships with Adyen, Global Payments, and Pfizer are expected to further attract merchants to Fastlane, with 75% of Fastlane consumers being new or dormant PayPal users [8] Value-Added Services - PayPal launched FX-as-a-service for automated currency conversion, which is already live on Meta Platforms [9] - The introduction of PayPal Everywhere has significantly increased debit card adoption, adding over 1.5 million first-time users in Q4 2024, with debit card TPV nearly doubling [11] Venmo Growth - Venmo's user base grew 4% year over year to over 64 million monthly active accounts, with monetized accounts beyond P2P and instant transfers increasing by over 20% [12] Expanding Partner Base - PayPal's partnerships with Fiserv, Adyen, Amazon, and Shopify are enhancing its prospects, with integrated branded checkout solutions driving operational efficiency for business owners [13][14] Earnings Estimates and Valuation - The Zacks Consensus Estimate for 2025 earnings is$ 5.02 per share, indicating a 7.96% growth over 2024, while revenues are expected to reach $33.01 billion, reflecting a 3.81% increase [16] - PayPal is trading at a forward 12-month P/E of 15.28X, significantly lower than the sector's 27.24X, indicating a favorable valuation [18] Investment Opportunity - PayPal's robust portfolio, expanding partner base, and attractive valuation make it an appealing option for long-term investors, currently holding a Zacks Rank 2 (Buy) [22]